Hearst Bay Area Blog

For anyone looking to carve a career out of display advertising, or simply have it represent a bigger part of their marketing plan, budget management is right up there with one of the most valuable skills around.

To demonstrate why this is so, let’s look at a simple analogy. Imagine you’re an antique collector entering the biggest auction on the planet. You’ve never seen so many items, their total value far surpassing any amount of money you could get your hands on. You can go for broke by simply investing in as much as you can with little consideration of what you’re getting, but the key is this: you cannot buy everything. Furthermore, purchasing items without considering their value is bad practice; you must find valuable items and ensure they fit within your budget.

Emarketer forecasts display ad spend at $41.74 billion in 2017 and other assessments project this is going even higher, depending on the definition of the format. This is a sizeable figure, but it’s possible that billions more will have fallen by the wayside as a result of publishers failing to sell off all their inventory. There is a vast pool of display ad spots available to advertisers - many sizes more substantial than the money they have to spend - so being able to effectively manage a budget is crucial to unlocking the benefits regarding awareness, leads and sales.

The way towards a more efficient, more cost-effective display operation is to allocate the right funds to the right sites and audiences, with granular analysis taking care of the rest. Here’s what you need to focus on to manage your budget:

Financial Planning

The first step is to set aside a budget for your display activity. Many tech firms have dedicated marketing budget calculators which generate a suggestion of outlay based on parameters like online sales, target conversion rate, and product values. HubSpot’s financial planning tool is useful if you know a bit about your online activity, but there are plenty that offer a more stripped-back estimate.

To guide you along the way, here are some points worth taking into account:

Past work: The first thing any new marketing manager should do when calculating their desired budget is to look at their predecessor’s level of spending. Beyond this, digging into their results can unearth crucial insight into whether more or less money is required.

Sales: Your revenue should certainly come into play when deciding on a display budget, particularly with regards to the amount you make online.

Competitor analysis: There are plenty of tools on the market that allow you to see where your competitors are spending money and how effective their campaigns are. These tools aren’t always free, but they provide useful insights into strategies that work and those that don't work in your industry.

Targeted spend: Performance-based ad metrics like cost per click (CPC) and cost per acquisition (CPA) make it easy for you to pinpoint how much you want to spend for a desired action. We could open a can of worms by explaining how much you should spend on these, but simply multiplying your target CPA or CPC will get you an idea of that section of the budget for a week or longer.

Goals: Consulting with your business aims is always sensible. For example, if you’re fresh on the market and your goal is to drive awareness, it might make sense to invest a bit more than your competitors in CPM advertising.

There are so many different ways of working out your budget, although it all boils down to you coming up with an amount you’re comfortable with. While some companies will end up dedicating 80% of their online spend to display because it performs, others will go for somewhere around 10-20% because, for them, it doesn’t. Parting with a small amount will minimize the risk at the same time as allowing for a good period of testing.

Next, it’s time to divide that up.

We'll Optimize Your Budget for Successful Campaigns

The Allocation Process

Many people will tell you that splitting hairs over pledging an extra $100 or $200 at the start of your display journey is futile. In all honesty, the thing is how you optimize your spend throughout your campaign.

In some display campaigns, the weighting of spending might be a straight 50/50 between keyword-based advertising (sites that carry content with the keywords you’re targeting) and desired domains (specific sites you wish to target). You then split things up into the metrics you’re targeting. You could dedicate 20% to CPA (cost per acquisition, where you pay for sales), 40% to CPC and 40% to CPM (cost per mille - 1,000, for your views). Divide your budget into these percentages, and you’ll have your caps for daily or monthly spend, depending on how you want to do it.

Going back to the budget calculator, your weighting depends largely on your goals. CPM and CPC present a safe bet for getting your brand seen, whereas CPA is for those who are serious about driving sales right from the start. In an ideal world, every budget would be 50%+ on a CPA which returns substantial sales. However, as you’ll likely find out, it takes hours of refinement to get your creative, timing and offers on point.

In the early stages, budgeting a high percentage for CPC with a little less for CPM and CPA makes for a good plan. This way you know you’re driving traffic without worrying about attributing sales to views or having to acquire business at every turn.

Your Sites

Now it’s time to select the sites you want to target. Depending on the tool you use to acquire ad space, there may be an option for you to zone into specific domains and to secure inventory from the source.

On Google’s Display Network - the most popular global solution if not the most well-known - there is a feature called ‘Managed Placements’, which offers an easy way to drill down into what you’re selling.

Start by choosing ten sites that complement your product line. For example, if your business sells computers, a site like a Tech Radar would be ideal. If you’re a bit stuck, head to the ‘All Referrals’ tab within Google Analytics and take a look at where your biggest sources of traffic are.

Here’s how things might look in your dashboard, complete with stats for how that specific site is performing:

Many advertisers will use audience parameters to select where they want their ads to go. It’s common for this to take the lion’s share of a display ad budget, but an even spread is absolutely essential if you’re either building display activity from scratch or looking for a revamp of your current approach.

For instance, you might go in with 80% of your budget dedicated to targeting a small cluster of audience segments, but the ten sites you added to “Managed Placements” could end up performing really well. Perhaps you envisioned an excellent performance on mobile, but dedicating 70% to these formats could be a disaster if people are more receptive to your desktop ads. Weighing things out evenly will prevent costly mistakes and help you find your sweet spot without a huge outlay.

We’ll add that for this “test and learn” strategy to work, you need to keep your options open on the creative side of things. It’s easy to say you don’t want to go backwards with something like text ads, but crafting a range of ad formats will allow you to explore the full breadth of your display ad console as well as the publishers connected to it.

Lastly, we’ll explore checking the box that allows ‘retargeting’ on some display dashboards. Retargeting ads target the people who have visited your website.

Conducted with the aim of assessing the consensus around retargeting, a survey from AdRoll on more than 1,000 marketing technologists revealed 92% saw a better performance from retargeting compared with search advertising, with the same percentage claiming the same compared with other forms of display. Additionally, through Google, it’s now easier than ever to glean more benefits in the form of insight from retargeting campaigns, as we can see in the example below.

Such findings can unearth compelling insight around the people that like to assess their options before completing a purchase - an audience segment which, historically, has proven hard to read.

Measurement

Effective management of your display spend feeds directly into the effective measurement of it. You can allocate days to working out your budget, your goals and sites you wish to target, but all of this will be undone if you spend money on campaigns that don’t return results.

Luckily for you, the internet is packed with articles that aim to explain how you go about measuring the ROI of your display ad campaigns. For the sake of brevity, these articles will tiptoe around something you’ve probably already done, and that is to set a goal for what you want to achieve. If you’re after X amount of visitors to your site and are happy with paying Y for this quantity, you can test to see whether your goals are being met.

Common ways of measuring your ROI include:

New customers: How much new business did you generate from your ads?

CLV: Very “in vogue” at the minute, tools that can assess customer lifetime value (CLV) present a way for advertisers to measure the financial impact of a single customer that was reeled in through advertising.

Basic ad metrics: Put simply, there is nothing wrong with targeting a certain amount of sales, leads or clicks from your advertising. For views, (related to CPM) perhaps add another layer by looking into your presence on your sites you wish to target.

In any case, it is wise to log down reports every week or month. Google Display Network has a Report Editor which allows you to build tables by dragging and dropping various bits of information. Most tools promote their ability to display data in a comprehensive manner, so this shouldn’t be a problem regardless of what tool you’re using.

A salient piece of advice for the measurement process concerns what you do after seeing the first batch of findings. You’d be surprised how a small tweak to your creative or an expansion of your geographical reach can completely change the fortunes of a campaign. With that in mind, try to conduct your alterations on a small scale. Test, learn and remember that you’ll always need to keep a close eye on your campaigns to optimize for success.